Playing the International Security System: How does Russia purchase sanctioned components from Taiwan and the US?
The capability of Russia to navigate and circumvent sanctions has allowed it to sustain military operations in Ukraine for an extended period. This is despite earlier assurances that the Russians won’t last longer than a few years due to an inability to regenerate equipment internally. Unfortunately, the circumvention of sanctions facilitates the continuation of the war. The significance of this is particularly evident in drone production, a key technology in the ongoing war. Our team gained access to documents obtained by the hacktivist group "Cyber Resistance" and conducted a thorough analysis of the data.
Earlier this year, InformNapalm, a volunteer intelligence community, scrutinized some of these documents, publishing a compelling and detailed investigation on the Russian Special Technological Center LLC's procurement of equipment from European and Chinese companies.
In summary, Frontelligence Insight has concluded that the Russian company "Special Technology Center," responsible for drone production for the Russian Ministry of Defense, indirectly acquires equipment from Keysight Technologies, an American corporation, and MPI Corporation, a Taiwanese company. To evade sanctions, Russians employ intermediary entities and former representatives of Keysight Technologies in Russia.
Though the list of procured items for sanctioned companies is extensive, our current focus narrows down to signal generators. In military manufacturing, these generators hold significant importance, playing a key role in both the developmental and testing stages of advanced electronic warfare systems, radar technologies, and communication systems. The actual range of tasks and problems that can be addressed with these generators is much broader, making them a dangerous asset.
What is "Special Technology Center LLC"?
The "Special Technology Center," abbreviated as STC, is a Russian company specializing in the production of technological equipment, notably the Orlan-10 UAV (Unmanned Aerial Vehicle) and Leer-3 drone-based electronic-warfare system for the Russian army. In addition to manufacturing these technologies, the company provides services for their maintenance, verification, and calibration.
This company has been sanctioned by many countries and can be located both in the sanction list of Ukraine and the US:
STC executes defense contracts and is directly involved in the procurement for the Russian army participating in the invasion of Ukraine. To understand how the STC acquires technological equipment from both American and Taiwanese sources despite sanctions, we need to take a closer look at the roles of intermediary companies involved in the process.
Intermediary companies
The Russian military-industrial complex continues to heavily rely on Western technology and components. According to the forthcoming documents we will provide, numerous Russian firms are actively collaborating with the sanctioned Special Technology Center, making efforts to procure the required parts for it.
The key person in the deliveries was the procurement manager of the Special Technology Center (Spetsialnyi Tekhnologicheskiy Tsentr) - Andrei Pavlovich Florinskiy. According to the leaked emails, Mr. Florinskiy received three commercial proposals for the supply of parts from KeySight Technologies.
It seems that one of these entities, named "Radioline," has previously made agreements with the Special Technology Center for the procurement of Keysight equipment, as indicated in these separate documents:
One of the most recent commercial proposals from Radioline, dated November 8, 2023, and signed by the lead engineer Mikhail Vladimirovich Mulminov, delineates the delivery terms for Keysight equipment:
Delivery time: 8–12 weeks from the date of receiving the advance payment.
Prepayment: 85% within 10 days from the contract signing date, with the final payment within 10 days from the date of full goods delivery.
Delivery to the buyer's warehouse at the buyer's address.
Our attention was drawn to the lead engineer of Radioline, Mikhail Mulminov, who has previously received contracts with this Special Technology Center. The conducted research has uncovered some concerning details.
On the website of Saint Petersburg Electrotechnical University, Mikhail Mulminov is recognized as a regional representative of Keysight Technologies, the American company from which the sanctioned company is seeking to procure equipment.
In this photograph, Mikhail Mulminov is standing alongside equipment with the Keysight Technologies logo during a lecture at another university, providing additional evidence of his association with Keysight Technologies.
This image visually aligns with his profile picture on the popular Russian social network "VK."
It is unclear whether he is still employed with Keysight Technologies and what his current connection to the company is. Nevertheless, it raises numerous concerns and creates questions that necessitate further scrutiny.
It remains unclear whether Russian company “Radioline” directly purchased equipment for the sanctioned STC from Keysight Technologies or utilized another third party. The awareness of the company regarding the end destination of its production, potentially reaching a sanctioned entity, is uncertain.
Widening the List of Suspects
The emails also suggest that Radioline is not the sole company tasked with acquiring Western technology for the Special Technology Center. It has also entered into an agreement with Protech, with CEO Denis Nikolaevich Koval acting as their representative.
Because of intermediate companies like Radioline and Protech, STC keeps getting necessary Western components, which are then used in the ongoing Russian invasion of Ukraine.
The Taiwanese Trace
In the realm of advanced technologies, the West is not the sole source of such products. Naturally, when constrained by sanctions, Russians broaden their search beyond Western avenues, which is why it's unsurprising that the sanctioned STC company made an agreement with Akmetron, a distribution company that imports Taiwanese dual-use technology from MPI Corporation into Russia. Headquartered in Taiwan, MPI Corporation specializes in producing semiconductors and various technological items, such as fiber optics and electronic components. According to intercepted documents, a procurement contract for an MPI TS150 Probe Station was granted, totaling $154,700.
As outlined in the commercial proposal, Akmetron offers the following terms and conditions to STC:
Payment: 50% advance within 5 days from the date of contract signature, with the remaining 50% due within 5 days from the date of equipment receipt.
The delivery period spans up to 24 (twenty-four) weeks from the date of contract conclusion, with delivery made to the customer's address.
The price covers assembly, adjustment, and training. Payment is to be made in rubles at the exchange rate of the Central Bank of the Russian Federation on the day of payment.
Summary:
In the current situation, as Russia continues to circumvent sanctions through intermediaries, it's not sufficient merely to verbally encourage Western manufacturers to be more vigilant; it's crucial to enforce these restrictions and impose sanctions against violators.
Addressing this problem requires a multi-step approach, including sectoral sanctions, robust monitoring and enforcement, and an increase in reputational costs for violators.
The inclusion of shell and intermediate companies supporting Russia in evading sanctions to blacklists should occur faster and more promptly, ensuring they are shut down before causing significant harm. Efforts to halt the supply of dual-use goods to Russia proved to be a more cost-efficient strategy than the prolongation of the war due to the ability of Russian economics to regenerate and create new weaponry for the Russian troops.
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